FER Forecasts E&S Market To Grow 4.6% In 2016

In case you missed the news before we went on vacation, here’s some end-of-summer optimism: Thanks to the strongest foodservice operator market since before the Great Recession and continuing demand in all three of the key domestic markets for equipment and supplies, Foodservice Equipment Reports is forecasting E&S sales at the manufacturer level will grow 4.6% in 2016 in current dollars. Real growth, after factoring out an anticipated 2.1% increase in prices, is forecast at 2.5%.  It will be the seventh consecutive year of growth for the E&S market since the industry experienced two years of declines in 2008 and ’09.

“We expect 2015 to be the peak of the current E&S market cycle,” FER Publisher Robin Ashton told those attending the magazine’s annual President’s Preview E&S Market Forecast meeting, held July 28 in Rosemont, Ill. “But E&S sales growth should remain quite strong in 2016 and for the three years through 2019.” FER forecasts growth in 2015 will reach 4.8% nominal and 2.5% real, as price increases are forecast at a slightly higher 2.3%. This compares with estimated growth of 4.4% nominal and 2.3% real in 2014.

Ashton attributed the continued strong E&S market growth to a very favorable general economic climate for restaurant operators; strong growth in the institutional, lodging, supermarket and other “spec” and non-restaurant segments; and moderating food prices boosting operator profit margins.

“The macroeconomic climate is as positive for foodservice as it’s been in more than a decade,” Ashton told the audience. “Jobs growth, disposable income and consumer spending trends are all very positive. Consumer confidence is at its highest level since 2004, and gasoline prices are falling yet again. All of this is helping drive sales and traffic gains for operators. And they, in turn, are taking some of those profits and investing in their kitchens and facilities.” Ashton noted that all three key market segments in the U.S.—chains, smaller chain and independent operators and spec markets—are buying E&S right now. “That makes for a very strong market.”

The end of pent-up demand for E&S was one factor that Ashton said concerned him and forecasting partner John Muldowney, Principal at Clarity Marketing, as they worked on the forecast. “With the E&S market recovery now six years old, most of the pent-up demand for E&S that accumulated during the recession has been wrung out of the market. But with operator sales and margins so strong right now, we don’t expect this to be a problem until later in the cycle.”

The complete FER E&S Market Forecast is available for purchase. It includes eight PowerPoint presentations covering general economic, operator and international trends; detailed materials pricing data and forecasts from MetalMiner Executive Editor Lisa Reisman; historical data on E&S prices from AutoQuotes Inc.; rankings of the top 100 E&S manufacturers and dealers; and the magazine’s hard-number forecast of the E&S market by nine product categories through 2019. The price of the forecast package is $1,595. Past attendees of the President’s Preview and previous purchasers of the forecast receive a $500 discount on the package. To purchase the forecast, email Christine Palmer at cpalmer@fermag.com. “””